Below are the top 5 ranked Fidelity Sector Funds.
- FSUTX (Utilties)
- FSAIX (Air Transportation)
- FBMPX (Multimedia)
- FIUIX (Telecom and Utilities)
- FBIOX (Biotechnology)
We now have 2 defensive funds in the top 5, and I guess one could make the argument that Biotechnology is a somewhat defensive play. I’m not sure how to characterize Multimedia.
The ranking method is proprietary. Holding the top three funds for a minimum of 30 days and then selling them if they have moved out of the top 3 and replacing them with the new top funds has generated a return of 11.6% YTD against the $SPY return of 10.5%.
Since 2007, the system has generated a compound annual growth rate of 16.41% with a maximum drawdown of -12.42% against the $SPY return of 1.62% with a maximum drawdown of -56.47%.
Nice work Sir.
you are the webs best
Fantastic work. I have been using a version of this system with etf’s and it works extremely well.
What system have you been using Pimp?
Virtue, I find the top 6 industry sectors by relative strength and buy the most liquid etf’s of the sector, I own 20%HDGE to edge out downside, works great
Cool, thanks! How do you decide when to get in to HDGE?
Hey Wood,
Once it broke it’s long downtrend in late Feburary I started accumulating shares, I’m actually up on it as well as my longs, not bad
Wood, I recall you have a sort of “stop loss” in addition to the momentum rankings. Any way to tell if it’s close to being triggered? This defensiveness is worrying.
Yes, it is so so so so complicated. All trades are exited if the $SPX closes beneath its 50 day average 😉
Since the funds must be held 30 days, even when this triggers, the funds will not be sold until the 30 held is met. If, when the fund is held for 30 days, the SPX is back above its 50 day, then there is no need to exit it unless it is no longer ranked in the top 3.
Wood, nice. I have a similar system with ETFs with CAGR of 16.5% from 2003-12. DD -8.55% ironically in 2010 ! My screen came up defensive end of March. No biotechs, but Staples , Health Care, Utes and Div payers. I hold 6 ETFs with a 30 hold. Keep it up I like seeing this type of work !
Thanks Jimmy, good stuff. Are you saying that you hold your ETFs for 30 days no matter what?
I had always thought of the 30 day holding period as a “bug” and not a “feature”, since you can’t get out whenever you want to, but I might be wrong. All of the academic studies use 30 day or longer holding periods; perhaps that’s not a coincidence. Maybe ETFs allowing you to exit quickly destroy any momentum advantage.
Or maybe all of this is related to things like fund turnover and how fast funds can accumulate a stock they want. FSUTX claims turnover of 156%, while XLU says turnover is 4%. Big difference if those numbers are correct.
Awesome work, thanks. Momentum works!
Thanks, and yes it does. Momo is perhaps the most persistent of all the edges.
I’m not sure why but momentum works for me really well with the sector funds. No matter what univers of ETFs or other funds I put together, the Fidelity sector funds always win. I think you already said that tactical asset allocation may not work as well going forward if bonds start a bear market as that model depends on bonds going opposite stocks and having positive total return. So back to the sector funds…
Wow! I had my phone turned off today and missed all these comments! Crud…